Deemed credit under compounded levy scheme cannot be denied when invoices show duty discharge under Rule 96ZP.

Deemed credit under the exemption notification was treated as available where inputs were cleared under the compounded levy scheme and the invoices disclosed discharge of duty liability under Rule 96ZP of the Central Excise Rules, 1944. The appellate authority held that such discharge amounted to duty payment under Section 3A of the Central Excise Act, 1944, and that the invoice declaration satisfied the notification conditions. The Tribunal affirmed this view, and the High Court noted that the issue was already covered by its earlier decision, leaving the department to proceed against the supplier rather than deny credit to the recipient.

---

---

Issues: Whether the manufacturer of final products was entitled to deemed credit under the exemption notification where the supplier of inputs, operating under the compounded levy scheme, had declared clearance under Rule 96ZP of the Central Excise Rules, 1944 and had not paid ad valorem duty.

Analysis: The assessee's entitlement to deemed credit turned on whether the declaration on the invoices satisfied the notification conditions when the supplier's duty liability stood discharged under the compounded levy scheme. The appellate authority held that liability discharged under Rule 96ZP amounted to discharge of duty under Section 3A of the Central Excise Act, 1944, and that the declaration that goods were cleared under Rule 96ZP was sufficient for the notification. The Tribunal affirmed that view, and the High Court noted that the issue was already covered by its earlier decision, under which the department's remedy lay against the supplier rather than the recipient claiming credit.

Conclusion: The claim to deemed credit was upheld and no substantial question of law arose against the assessee.

Final Conclusion: The revenue appeal failed, and the denial of credit was not sustained.

Ratio Decidendi: Where inputs are cleared under the compounded levy scheme and the invoices disclose discharge of duty liability under Rule 96ZP, deemed credit cannot be denied to the recipient merely because the supplier did not pay ad valorem duty.

---